Analysis of Ryanair's

Competitive
Advantages

Mohammad Taghi Abedian

Student ID:2821972
 About Ryanair
 Founded in 1985:
 2 Aircrafts

 Carried 82,000 Passengers

 1991: Michael O‟Leary Appointed

 Transformed to Low Cost Airline
 1997: Floated on Dublin SE and Nasdaq
 Rapid Expansion (2008 Figures):
 169 Aircrafts

 794 Routes

 148 Destinations, Across 26 European Countries

 58 Million Passenger Annually

Source: European Low Fares Airline Association,2009
 Key points from the article
Ryanair’s Integrated Business Strategy

Resource-Based Marketing
View View
(Inside out) (Outside in)

Low Cost Airline Business Model

(Passes the costs directly to Ryanair’s
customers)

Variety of Destinations &Routes

Competitive Advantage
Competitive position
 External Analysis:
Porter’s Five Forces
Threat of New Entrants

HIGH

Industry Competitors
Suppliers’ Bargaining Power Buyers’ Bargaining Power
Rivalry Among Existing Firms
LOW LOW
HIGH

Threat of Substitute Products

MEDIUM
 External Analysis, PEST Analysis

POLITICAL(Low impact) ECONOMICAL(Low impact)

• Inside Europe • Inside Europe
Political stability Stable economy
Stable consumers

• Outside Europe • Outside Europe (undeveloped market)

Middle East non- stable economy
OPEC ,a political force non -stable
 External Analysis, PEST Analysis(Cont’d)

SOCIAL(Highly Impact) Technological(Low impact)

• Changing consumer • Aircrafts
demographics
• Fluctuating consumer • Supply chain software's
preferences programs
 Ryanair: Value Chain

Minimum Corporate HQ
Infrastr.
Low Cost Management Performance
Limited Crew In-house
HRM Training Control Contracts
Internet Integrated Low Tech Marketing
Tech. Dev. Internet n/a
Information Systems Internet Sales
Proc. Boeing Discount Outsourced Private Low Cost
Alliances
Low Cost
Quality Training No Frills Quick Promotions
Limited
Turnaround Resources
Low Cost Low Cost* Free Publicity
Suppliers Basic/Low Cost
Reliable Controversial
Airport Service Internet Sales High Productivity
Agreements
Yield Management

Inbound Operations Outbound Marketing Service

Logistics Logistics & Sales
 Business Model
Full Service( Traditional)
• Using Hub& Spoke network
• Congestion during peak hours
• Delay of only a few inbound
flights Will spill over across large
portions of the network
• Low average daily utilization of
aircraft, higher costs per seat mile
• Enormous transaction costs
• Complex fare structure
Low cost(LCC)
• Non-stop point-to-point services
• High seating density and load
factors
• Uniform aircraft types (usually the
737-300)
• Direct booking (internet/call centre
- no sales commissions)
• No frills such as “free”
food/drinks, lounges or „air miles‟
• Simple systems of yield
management (pricing)
• Use of secondary airports to cut
charges and turnaround times
 Average cost per seat Mile
Low Cost (LCC) vs. Full service (Traditional )
 Breakout :, Cost per seat Mile Gap
Low Cost (LCC) vs. Full service (Traditional )
 Break Down of Cost Saving
Low Cost (LCC) vs. Full service (Traditional )
 RYANAIR Competitive Advantages
 Online Bookings
 One Class Travel
 Ticketless Boarding
 Unallocated Seats
 Flying to Secondary Airports
 Point-to-Point Flying
 In-house Marketing
 No Frills
 Reduced Turnaround Times
 No Refund Policy
 Corporate Partnerships
 No Cargo Service
 Bargaining Power
 New Aircrafts
 Owns Own Fleet
 Operations Denominated in
Euro
 Hedge Fuel Risk
 Highly Successful Ancillary
Service Offering
 Outsourcing of Services at
International Airports
 RYANAIR Competitive Advantages(cont’d.)

 Limited Airport  Eliminating seatback

Transportation
 Advertising on Airplanes
 Yield Management
 Uniform Fleet
 High Productivity
 High Service Levels
 General Cost Reductions
pockets
 No blankets or pillows
 Airsickness bags
distributed on request
 Charges larger penalties
for overweight luggage
 Europe short haul market(TOP.6)

• Lufthansea
Passengers – 5.53m
Market share – 7.8%
• Ryanair
Passengers – 5.12m
Market share – 7.2%
• Air France
Passengers – 4.64m
Market share – 6.6%
• easyJet
Passengers – 3.53m
Market share – 5%
• Iberia
Passengers – 3.3m
Market share – 4.7%
• SAS
Passengers – 3.23m
Market share – 4.6%
Ryanair, World’s N0.1 Carrier
Ranked By IATA(2008)
 Ryanair’s Future Plans

Cutting Costs Revenue Enhancement

 No Window Blinds  Satellite Television
 No Reclining  Internet On-board
Seats, Leather Seats  Rented In-flight
 Velcro Headrests entertainment
 Carry-on Luggage
 Ryanair’s Future Plans(cont.)

“Free tickets. In a decade or so, airlines will pay

travellers to distribute people around Europe.
The airline industry is Tesco, is Ikea, is network TV in
the way viewers watch for free and advertisers
Pay for access to them, is the internet in the same way
that websites earn money for delivering click-through
traffic or other sites.”

Michael O'Leary ,Chief Executive Officer of the Irish airline Ryanair

 Personal evaluation about article

• How practically Ryanair cutting costs?

• What are the main competitive advantages?

• How differentiate Full service(traditional) airline

industry with low cost ( LCC) airlines?
 Conclusion

Ryanair rapid growth is due to:

• Low cost Airline Business Model that

restructured European Aviation Industry

• Pioneer Innovative Cost Reduction Methods

• Creative Alternative Revenue Generation &Free

Flights goal in next phase evolution
 Q&A

Questions ?
Thank you!